Six strategies for eliminating processor bias

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This coin originally appeared in the November 2021 edition of ReportM, available here.

In almost every mortgage team, there is processor bias: a form of discrimination where bankers on a mortgage team would prefer their loans to go to one processor rather than another, usually because of the desire to increased efficiency.

But why is this? Are these favorite processors much better or have they found the secret sauce? The answer usually comes down to two things: systems and organization. They can have clearer spreadsheets, workflows, and naming conventions. They are very organized and able to prioritize etc.

However, when processor bias is present, it creates inefficiencies that trickle down to the production team, slowing down closures and limiting the number of business initiators that can be supported. This not only translates into a poor customer experience for borrowers, but lenders can also become less competitive, which they cannot currently afford to be.

Consider home inventory remaining at an all time high, down 12% from just a year ago. At the same time, 20% more Americans plan to move this year compared to last year. As they move, consumers struggle for the limited number of homes available. In fact, homes only spend an average of 17 days on the market. Mortgage teams need to be able to keep pace in this new environment, and removing processor bias is a good place to start.

To eliminate processor bias in the mortgage industry, lenders should consider these six strategies.

End the first in, first out process
Too many processors are operating on a FIFO (first in, first out) basis, resulting in bottlenecks that back up the system. The easiest and fastest loans are overlooked because other loan applications came before them.

However, the date a case is submitted should not be what dictates its priority in the pipeline. Processors need to be able to quickly examine a file and schedule jobs if necessary. Otherwise, they risk spending time on a loan that takes 45 days to close before managing a loan that will only take seven days.

Allow parallel processes
Likewise, working on multiple processes simultaneously can ensure the most efficient loan production system. Often, processors order the title work and then wait for the title to come back before moving on to the next step. It is ineffective.

A best practice is to assess the case and determine the timeline appropriately. Some items are long while others are ready to be completed simultaneously. The best workflow follows both linear and parallel processes.

Take advantage of cloud-based document and file name management systems
Manual or disorganized digital systems do a disservice to processors who struggle to navigate files quickly. To ensure that processes run smoothly, access to files and documents requires a specific filing structure for each loan, processor, and team. A consistent naming convention can help team members confidently search and find what they need.

Additionally, some items like payment statements, rate locks, title quotes, and disclosures have expiration dates. Lenders need a system to alert them, as well as any third party, to update documents when needed.

Tap into automated task lists
One of the most important issues in processing is that of different and disjointed systems: each employee, loan officer, processor, underwriter, and title company handles their tasks differently.

For a mortgage branch to operate efficiently and profitably, the systems approach to task management is no longer a ‘good to have’. Managing workflows and tasks like running a fast food restaurant or assembly line is necessary. Each stage of the loan has a transparent process, so the right person is doing the right thing at the right time.

Use insights and dashboards to save time
A mortgage company’s DDA does not provide a complete picture of what is needed to push different loans to the next stages and avoid bottlenecks in the pipeline. To combat this, many mortgage teams spend more time in meetings, check-ins, status updates, and reports. It is incredibly inefficient. While meetings and reports can provide useful data for management to make effective decisions, the time consumed is outrageous.

Teams also need to be able to forecast closings, revenue targets, goals, and production to know when to step up marketing and when to take it off the pedal. Historically, spreadsheets have been used to provide this information and are updated manually every day. While spreadsheets can be useful, there’s still a huge problem: they require a human to update them, and humans make mistakes. In addition, manually updating spreadsheets always consumes valuable time. The solution lies in a system with automatically updated dashboards accessible to every member of the mortgage company team.

Implement an assembly line philosophy
The best teams have a way of managing workflows and tasks similar to an assembly line. Consider Henry Ford. He noticed that when one mechanic is working on one car at a time, the mechanic must have a broad understanding, specialization, and knowledge to excel at each specific task. It also slows down production.

Ford then realized the need for a specialized workforce. Instead of having a mechanic to build the whole car, you have one employee responsible for the engine, another for the wheel hub, another for the interior, etc. You create a conveyor belt to pull the car from station to station, so instead of moving tools, you move work product.

For mortgage teams, automated task management streamlines processes so processors get the most done in the shortest time possible. Using tools like this allows the team to look at a screen and be given the job, fully prioritized.

Do you have someone on your treatment team who is a rockstar? The processor that every loan officer wants to work on their loans because it is faster and more efficient? Although processor bias is common, it results in organizational inefficiencies.

Instead, teams should focus on eliminating this bias by removing FIFO processes, enabling parallel processes, implementing cloud-based document management and file naming systems, automating processes and tasks, using information and dashboards and implementing an assembly line philosophy. Those who do will not only provide better experiences, but also increase their competitiveness.

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